February 7, 2011

According to the Native American Contractors Association (NACA), ProPublica once again dismissed all objectivity in a January 27, 2011 story on Alaska Native Corporations (ANC) that uses flawed methodology and unverified data sources to draw unreliable conclusions regarding ANC subcontracting statistics resulting from the American Recovery and Reinvestment Act.

“ProPublica refused to publicly disclose the raw data sources it used as the basis for its ‘Recovery Tracker’ database,” stated NACA’s Executive Director Sarah Lukin. “ProPublica’s research cannot be validated or independently authenticated, and its results therefore cannot be trusted as an accurate source of information.”

Over the past several weeks, NACA communicated extensively with ProPublica bloggers Michael Grabell and Jennifer LaFleur, and made every effort to verify the data cited in yesterday’s story. NACA’s research team poured through thousands of pages of publicly-available databases, including the Federal Procurement Data System (FPDS) and Recovery.gov. According to NACA, ProPublica misled the organization to believe that it, too, was referring to some of these same data sources in basing its research. However, the day before ProPublica’s story, Ms. LaFleur advised NACA’s research team that ProPublica had concocted its own database of information and was basing its research conclusions from it. NACA’s database expert requested to see ProPublica’s database to verify its accuracy and content, but Ms. LaFleur refused to provide NACA access to the information.

NACA noted that one example of the discrepancy between ProPublica’s research and the data available from public databases is the total amount of ANC Recovery Act contracts. ProPublica claims ANCs received $823 million for 742 projects; this figure is nearly twice what the FPDS database shows.

NACA asserted that ProPublica’s story overlooks the fact that all federal contractors are allowed to subcontract and that 8(a) companies, including ANCs, are allowed to subcontract at varying percentages of their overall work. This is designed to provide 8(a) companies the ability to gain experience and develop relationships through the work of their subcontractors. ProPublica’s analysis conveys the misimpression that ANCs are somehow unique in their use of subcontractors, when this is an essential, common practice among most federal contractors.

Of equal concern, ProPublica irresponsibly makes sweeping generalizations based on a snapshot of incomplete data in its January 27, 2011 story. According to NACA, conclusions based exclusively on stimulus awards, regardless of the unknown data sources used by ProPublica, reveal an incomplete and inaccurate picture of total ANC subcontracting percentages.

For example, ProPublica withheld from its readers that stimulus contracts are frequently awarded as task orders or modifications to existing federal contracts. According to NACA, federal rules provide that permitted subcontracting percentages are to be calculated on the value of the entire contract, and at certain performance intervals, yet ProPublica ignored the regulations and implied that ANCs were not in compliance. ProPublica’s snapshot approach failed to look at the total value of the contracts it analyzed for its story, or the timing of the incurred subcontracting costs, and misinformed its readers on the actual percentage of overall ANC subcontractor use.

Not surprisingly, efforts by NACA to highlight these facts to ProPublica in advance of its story were dismissed.

NACA informed ProPublica that a core provision of the American Reinvestment and Recovery Act encourages federal contractors to maximize the use of small business subcontractors in fulfilling the terms of a stimulus award to further help bolster the US economy. NACA referred ProPublica to the OMB Recovery Act guidance documents (http://www.whitehouse.gov/omb/recovery_default/) where this key provision is clearly stated. According to NACA, ProPublica irresponsibly attacked ANC Recovery Act subcontracting when, in fact, ANC efforts fulfilled the very purpose of the Recovery Act itself by spurring economic growth among American small businesses. ProPublica also failed to highlight that non ANC contractors have received far more in overall stimulus contracts, and that ANCs collectively receive less than two percent of all annual federal procurement.

According to NACA, ProPublica also failed to clarify that ANC self-performance standards only apply to the labor or manpower costs of a particular contract. For example, if a $20 million dollar contract calls for $10 million in materials and equipment, which is not uncommon, the self-performance standard applies only to the remaining labor or manpower portion. It appears ProPublica incorrectly applied the minimum self-performance standard to the total value of each stimulus contract award, further obscuring the accuracy of ProPublica’s conclusions.

NACA noted that the Government Accountability Office and respected academic institutions such as the Institute of Social and Economic Research and UCLA have all determined that ANCs are returning essential social, cultural and economic benefits to their Native communities. “Senator McCaskill’s continued attempts to strip Native 8(a)s of their government contracting opportunities will deny Native people one of the few economic prospects we have to address critical socio-economic issues in our communities,” Ms. Lukin continued. “The truth remains, the Senator’s repeated assaults on Native 8(a), not ANC subcontracting, will determine the future fate of America’s indigenous people.”

“ProPublica based its conclusions on an isolated portion of an incomplete set of data,” Ms. Lukin concluded. “ProPublica’s continued zeal to disparage ANCs misinforms the public about these hard working businesses that are providing real value to the U.S. government and their respective Native communities.”

For additional information contact Sarah Lukin at 202.758.2676

The Native American Contractors Association (NACA) is a national Native advocacy organization based in Washington, DC. NACA represents and serves Tribal, Alaska Native Corporations (ANCs), and Native Hawaiian Organizations (NHOs) across the nation on issues relating to the economic self-sufficiency of America’s indigenous people, focusing on our members’ participation in government contracting and the Small Business Administration’s 8(a) Business Development Program. NACA’s members represent over 475,000 Tribal Members, Alaska Native Shareholders, and Native Hawaiians.